Chandigarh: If you regularly pay for fuel using UPI, there could be a change in how large transactions are handled at petrol pumps from October 15, 2026. A new Merchant Discount Rate (MDR) framework is set to apply to certain UPI merchant transactions above Rs 2,000. Petrol pump dealer associations have sought an exemption from the charge and warned that they could stop accepting UPI payments above Rs 2,000 if their demand is not addressed.
Will UPI Stop Working For Petrol Payments Above Rs 2,000?
There is currently no blanket government order banning UPI payments above Rs 2,000 at petrol pumps. The issue is linked to the introduction of MDR on specified merchant transactions above Rs 2,000. Under the new framework, transactions up to Rs 2,000 will continue without MDR, while certain transactions above that threshold will attract a charge.
For fuel transactions, the MDR has been set at a flat Rs 5 per transaction. The charge is primarily a merchant-side payment cost and does not mean that every customer will automatically be charged Rs 5 for making a UPI payment.
Why Are Petrol Pump Dealers Opposing The New Charge?
Petrol pump dealer associations have raised concerns about the financial impact of MDR, particularly because fuel dealers operate on relatively fixed margins. The All India Petroleum Dealers Association has sought a complete exemption from MDR for UPI transactions at petrol pumps. Dealer associations in Punjab and Haryana have also raised the issue with the authorities.
Dealers have argued that absorbing an additional payment cost on high-value fuel transactions could put further pressure on their margins.
Could Petrol Pumps Stop Accepting UPI Above Rs 2,000?
This is the key concern for customers. While UPI payments above Rs 2,000 have not been prohibited, petrol pump dealers have warned that they may stop accepting such payments if fuel transactions are not exempted from MDR. If that happens, customers filling larger fuel quantities may have to use cash or other payment methods for transactions exceeding Rs 2,000.
How Will The Rule Affect Customers?
The potential change could particularly affect people filling fuel worth more than Rs 2,000 at a time. Car owners, commercial vehicle operators, truck drivers and people travelling long distances may be more likely to make high-value fuel payments. For customers, the practical impact will depend on whether petrol pump dealers continue accepting UPI for transactions above Rs 2,000 after the new MDR framework takes effect.
When Will The New UPI MDR Framework Start?
The new framework is scheduled to come into effect from October 15, 2026. UPI person-to-person transactions will remain outside the MDR framework, while merchant transactions up to Rs 2,000 will continue without MDR. The petroleum dealer associations are seeking an exemption specifically for fuel transactions, and the issue remains under discussion.
